INTRODUCTION :: From the perspective of the present day, Rule 23 of the Federal Rules of Civil Procedure contains a difficult puzzle. After a court certifies a class pursuant to Rule 23(b)(3) in a money damages case, absent class members must receive notice and have a chance to opt out. Their counterparts in injunctive or declaratory relief suits prosecuted pursuant to Rule 23(b)(2) do not. As long understood, the class certification decision essentially equals a determination to bind all class members to the eventual judgment. Class members seeking money damages therefore have some control over their rights to sue before these rights are finally extinguished. In contrast, injunctive relief class members must remain in the class.
This puzzling link between procedural rights and remedial choice has constitutional ramifications. Rule 23′s power lies in the expansive res judicata its judgments generate. Because a right to sue ostensibly belongs to an individual class member as his or her property, however, this benefit also triggers a due process problem. A preclusive judgment amounts to a final sale of a right to sue. The exchange of property it entails means that an individual ordinarily must have her day in court before res judicata may constitutionally attach. As a nearly unique exception to this “‘deep- rooted historic tradition,’” the class action requires some other source of legitimacy. Notice and opt-out rights, at least in theory if not so much in reality, help in this regard. The failure to opt out arguably indicates class members’ consent to a judgment pursued in their names. An alternate function departs from the idea that a judgment can extinguish a person’s right to sue without her actual participation in the litigation, so long as someone else represents her interests adequately. Notice and opt-out rights act as procedural safeguards to ensure that classes do not suffer from conflicts of interest. Either way, some form of notice (less controversially) and opt-out rights (more so) are arguably woven into Rule 23′s constitutional fabric. Yet, the rule eschews them for injunctive relief suits.
Decades after Rule 23′s modern reincarnation in 1966, a number of courts and commentators have ventured solutions to this puzzle, but, as I describe in Part I, none has wide acceptance. This disarray leaves class action doctrine remarkably unstable in a number of ways. The Supreme Court, for example, concluded in 1985 that due process requires notice and opt-out rights in Rule 23(b)(3) suits for money damages. With no explanation, it expressly declined to say whether the same is true in injunctive relief cases, which, if so, would render Rule 23(b)(2) unconstitutional. Befuddlement at these rights’ selective enjoyment likely contributed to this confusion.
In this Article, I excavate the historical answer to the Rule 23 puzzle, one that suggests that the rule’s structure has little to do with theoretical distinctions between types of remedies. Far more important was the particular moment in American history during which the Federal Civil Rules Advisory Committee (the “1966 authors”) undertook the revision of Rule 23. To capture this moment, I reconstruct a neglected chapter in procedural history that stretches from 1938, when the first Rule 23 went into force, to the early 1960s, when the 1966 authors labored. I pay particular attention to Rule 23′s experience in desegregation litigation, which generated the sole doctrinal foundation for the class-wide res judicata that the remade Rule 23 would facilitate. Others have exhaustively chronicled the story of the legal campaign against Jim Crow, but until now, it has lacked this procedural chapter. Finally, I mine the surviving transcripts, memoranda, and letters the 1966 authors created as they revised Rule 23, in order to unearth their reasons for treating money damages and injunctive relief class members differently.
This history yields an answer to the Rule 23 puzzle that roots modern class action doctrine in a moment of supreme nobility, but one that also presents some challenging implications for this doctrine going forward. Rule 23(b)(2) was written for a very specific purpose. Judicial sympathy for racial integration and the 1966 authors’ political commitments, rather than some conception of what due process requires, best explain why Rule 23 requires the mandatory class treatment of injunctive relief claims.
Until 1966, judgments could bind and benefit absent class members only in specific, narrow instances, an infirmity that made class action practice largely a backwater. Desegregation litigation, in which black plaintiffs invariably relied on Rule 23, was an exception. Courts permitted class treatment of equal protection claims and issued broadly preclusive judgments. They did so first in a limited range of cases then, as judges sympathetic to integration began to dominate the southern federal bench, even in instances where class members likely had deep and fundamental conflicts of interest. I describe the general course of 1938-1966 class action doctrine and this desegregation anomaly in Parts II and III, respectively.
The 1966 authors expected and hoped that all judgments obtained pursuant to their revised rule would generate res judicata for absent class members. No trans- substantive explanation appears in available records for why they thought this expansion in preclusion required notice and opt-out rights for Rule 23(b)(3) class members but not for their Rule 23(b)(2) brethren. Indeed, these records contradict attempts in present-day case law and commentary to solve this puzzle in such terms.
The fact that the 1966 authors shaped Rule 23(b)(2)’s contours exclusively in response to the circumstances of early 1960s desegregation litigation suggests an answer, which I provide in Part IV. Casual observations of Rule 23(b)(2)’s connection to civil rights litigation are legion. The extent of its ideological design and how and why it came to be, however, have gone much less appreciated, particularly as the focus in class action commentary has shifted to mass torts and securities litigation in recent years. The conflicts of interest among class members that notice and opt-out rights might help highlight would have strengthened arguments against allowing desegregation cases to proceed as class suits. Rule 23(b)(2)’s champions ardently supported litigation-driven integration, and they believed class treatment of equal protection claims essential to its success. Relying on doctrine developed by integrationist federal judges at approximately the same time, the 1966 authors drafted a provision that could help judges ignore or bury such conflicts.
No theory of interest representation, or other trans-substantive theory for that matter, justified this selective provision of notice and opt-out rights. Rule 23′s resistance to a cogent justification in purely procedural terms thus hardly surprises. Indeed, an observer of class action practice in the mid-1960s may not have bothered to try to explain Rule 23 accordingly, fully appreciating the substantive purpose lurking in Rule 23(b)(2)’s substance-neutral terms. In one sense, then, my ambition in this Article is modest. I simply want to recreate the historical milieu out of which Rule 23 emerged.
But the story I tell has profound implications for class action doctrine and even for the very ideal of trans-substantivity in civil procedure. The need for substantive context to explain Rule 23 means at the least that modern class action doctrine suffers from a noble flaw. Concerns of substantive justice relevant in a particular era provided part of the normative foundation for an ostensibly substance- neutral rule. But this substance-specificity destabilizes fundamental aspects of contemporary class action doctrine. This Article’s heart lies with the historical connection between civil rights and Rule 23, but I also discuss some of these current implications in Part V.
November 2014, Vol. 66, No. 6
Lily Kahng, The Taxation of Intellectual Capital